Dot.com Stock Boom Crashed 25 Years Ago: What Gold Investors Need to Know

Happy anniversary. Twenty-five years ago in March 2000, the dot.com stock market bubble began to burst. Looking back, in the mid-1990s, the dot.com era ushered in a period of explosive growth in information technology and the internet.

Depending on your age, you may not recall when Google didn’t exist for your everyday questions. For reference, Google was founded in 1998 and its search engine became popular in 2000. Before then, if you had a question, people went to the library and used Encyclopedias.

Any new start-up companies searching for capital simply had to add “.com” to the end of their firm name, and they quickly attracted generous venture capital. Many high-flying dot.com stocks never generated any revenue or became profitable, yet their stock prices soared wildly during the build-up to the stock market bubble top.

In 1999 alone, the NASDAQ grew an astonishing 86%. What happens next isn’t so pretty.

From the March 2000 top, over the next two years, the NASDAQ index crashed 77%, bottoming in October 2002. Ouch. That’s a big bust. The dot-com bubble burst opened the door to the economic recession in 2001.

What happened to gold during this time?

Historically, when the stock market plunges, gold prices rise – often substantially. During the dot-com crash years, investors piled into the safety of gold as their investments in the stock market deteriorated sharply and stayed low for over a decade.

From the NASDAQ’s October 2002 low, it took a long fifteen years, before that index set a new all-time high in April 2015. That’s a long time for stock market investors to wait.

Today, there are more than a few on Wall Street who point to the Magnificent Seven technology stocks and see parallels between the current artificial intelligence boom and the 2000 dot.com crash. The huge amount of speculative AI investment, the rapid growth and expansion, and the hype and high expectations around the outcome of future AI tools are eerily

similar. After all, despite billions of dollars of investment into big-tech AI tools, very few of them are profitable and many of these companies stock prices are climbing based on ideas of future potential profit—not actual revenue today.

For investors chasing the AI stock market boom, it’s worth considering the Latin phrase “caveat emptor” which simply means “let the buyer beware.”

Investors may also want to consider bolstering their allocation to gold today. That 77% decline in technology stocks during the dot.com crash was a tough pill for investors to swallow. Gold offers you protection for your wealth and an opportunity to grow your money even if the stock market turns down.

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